February 3, 2023

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Ukraine’s Allies Agree on Russian Oil Price Cap

2 min read

An elaborate United States-led plan to limit what Russia can charge for its oil exports is set to cap the price of Russian crude at $60 a barrel, the Group of 7 nations agreed on Friday. The threshold, which was settled on after protracted negotiations among European Union diplomats, is likely to make a small dent in the Kremlin’s energy revenue and, the White House hopes, help avert a global oil shock.

The deal was heralded by the E.U.’s executive body and won the quick approval of the rest of the G7 and Australia late on Friday.

“With this decision today, we deliver on the commitment of G7 Leaders at their summit in Elmau to prevent Russia from profiting from its war of aggression against Ukraine, to support stability in global energy markets and to minimize negative economic spillovers of Russia’s war of aggression, especially on low- and middle-income countries, who have felt the impacts of Putin’s war disproportionately,” the joint statement said.

The final agreement came after months of deliberations over how to keep economic pressure on Russia without creating an oil price shock that will cause a global recession. Negotiators in Europe worked through the week to settle on a price for the cap, completing it with little time to spare before an embargo on Russian oil takes effect on Monday.

“This price cap has three objectives: First, it strengthens the effect of our sanctions. Second, it will further diminish Russia’s revenues, and thirdly, at the same time, it will stabilize global energy markets,” said Ursula von der Leyen, president of the European Commission, shortly after the deal became final.

The United States praised the agreement and said it would curtail Russia’s ability to fund the war.

“Together, the G7, European Union, and Australia have now jointly set a cap on the price of seaborne Russian oil that will help us achieve our goal of restricting Putin’s primary source of revenue for his illegal war in Ukraine while…

Matina Stevis-Gridneff, Jim Tankersley and Alan Rappeport

2022-12-02 19:38:56

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